P&H HC reprimands CESTAT for Decade-Long Stay on Pre-Deposit to Tobacco Company [Read Order]

The Punjab and Haryana High Court has reprimanded the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) for virtually allowing a decade-long stay on the pre-deposit to Pelican Tobacco Co. Ltd.,

A demand/show cause notice dated 30.04.2010 (Annexure A-1) was issued upon the premises of M/s Pelican Tobacco Co. Ltd. which was registered with the Central Excise Department and engaged in manufacture of various brands of cigarettes.

The premises had been searched on 21.04.2008 under the search warrants and resultantly vide detailed order dated 23.08.2011 (Annexure A-2), various amounts were imposed as penalty under the provisions of the said Act both upon the company and the Directors-respondents along with other officials.

The Directors, namely, Shri A.K.Singh and Shri R.K.Singh, respondents herein along with the company and other employees preferred appeals and stay applications.

Directions were issued to the company to deposit 50% of the duty component assessed which had been fixed from the date of receipt of the order and the said order dated 23.08.2011 was accordingly suspended. It was directed that in default of the deposit the respondents were entitled to take steps for recovery of the entire amount of penalty of the 50% of the default (after taking credit for Rs.1,08,00,000/- already deposited).

The company approached this Court by filing CEA-65-2013 through the Director Mr.A.K.Singh and the Co-ordinate Bench by taking into account the fact that the premises were closed for the last 5 years accepted the appellant’s submission to the extent that Rs. 6 crores should be deposited within 15 days by the assessee vide order dated 26.08.2013 so that the appeals could be heard on merits.

On account of failure of the said amount being deposited, the Tribunal noticed that counsel for the appellants including the appeals filed by the Directors and as counsel also agreed that on account of non-deposit the appeals were required to be dismissed both for the non-compliance of the Tribunal’s stay order read with the order of this Court dated 26.08.2013 passed the formal order of dismissal in 2013.

The company then filed an SLP before the Apex Court wherein the amount which was required to be deposited by 31.12.2015 was reduced to Rs.4 crores vide the order dated 21.08.2015. A condition was put that if the amount is deposited with the Tribunal, it will restore and hear the appeal, otherwise the appeal would stand dismissed. The amounts were apparently never deposited and therefore, the order affecting the dismissal of the appeal on an earlier occasion remained in force dated 23.09.2013 read with order of the Apex Court. It has been pleaded by the Revenue that the review petition was also dismissed.

Further, the tribunal, in consideration of an application for condoning delay in filing restoration applications, came to the conclusion that the company was to make the pre-deposit and therefore, the applicant should not suffer.

The Bench of Justice G S Sandhawalia and Justice Lapita Banerji noted that, “the said Director himself was approaching this Court and the Apex Court by filing writ petitions and SLPs and was well aware that apart from the company he had also been denied the benefit of exemption from waiver of the pre-deposit and his appeals had been dismissed.”

It was further observed that, “the question of law must be answered in favour of the Revenue that the Tribunal had no jurisdiction and would have become functus-officio once the amounts had never been deposited in spite of the directions in the SLPs dated 21.08.2015. The applications filed at the belated stage by the Directors themselves in the year 2018 for condoning the delay on 10.08.2018 was apparently time-barred and there was no sufficient cause to condone the delay also which had been done by the Tribunal.”

It was further noted that, “the review application having been dismissed also by the Apex Court, the stay applications were misconceived as apparently the respondents-Directors had been playing the game of hide and seek with the Department and by misusing the process of the Court has wrongly been granted indulgence by the Tribunal.”

The Bench thus remarked that, “The Tribunal in such circumstances has over-stepped its jurisdiction by allowing the application for condonation of delay and restoration of the appeals and thereafter proceeded ahead with the matter for the reasons best known to it. We do not wish to comment on the orders passed by the Tribunal in the present facts and circumstances.”

To Read the full text of the Order CLICK HERE

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